Supreme Court Decision Could Cost Health Plans $1T in Loss Revenue

The Supreme Court is expected to rule on the constitutionality of the ACA in June. The decision ahead could: (1) uphold the law (2) over turn only part of the legislation (i.e. the individual mandate), or (3) strike down the bill in its entirety.

A recent report by Bloomberg Government assessed the financial impact the Supreme Court decision could have on health insurers. Health plans have much at stake in the ruling since it would affect operations of the California Health Benefit Exchange and Medicaid expansion. The report focuses on the financial loss of the individual mandate and Medicaid expansion.[1]

For the individual mandate, the report found that over an eight-year budget period (FY2013-2020) about $880B in new revenue would be at stake for private health insurers. Of that, $560B would be from federal subsidies used to offset the cost of premiums, and the remaining $320B would be from the consumer’s share of costs.

Medicaid expansion would generate $670B in new federal spending over the same budget years. Of that, an additional $150B in new revenue would be at stake for insurers that participate in the program. When combining income generated from both the individual mandate and Medicaid expansion, insurers could potentially lose $1T in new revenue; a loss that would not only affect the healthcare industry, but the economy at large.

Part two of the Bloomberg report will assess the impact of the Supreme Court’s decision on hospitals, nursing homes and other healthcare providers.